The telecom sector has been the biggest success story of foreign direct investment ever since state monopoly was broken in the mid-90s. Starting with ensuring connectivity among the people, industry today stands tall in facilitating digital transformation of the economy and society. In total, around USD 18 to 20 billion has been invested since the beginning of the industry to reach where we are today.
So, after close to 30 years of technological upheaval at breakneck speed, is the industry a spent force for drawing foreign direct investment? The answer lies in the way we set the rules of the game for the telecom sector in the form of policy and regulations.
We recently had a revision of the telecom policy. Following the July uprising of 2024, this was a very crucial piece of reform for the telecom sector. But looking at the reformed telecom policy, it is hard to imagine how it will benefit the customers and facilitate eradication of the digital divide in the country.
One of the key contentious issues is the capping of foreign shareholding in a mobile telecom company. This will force the shareholders to divest 15% (operator to operator varies) of their stake in the mobile companies to local investors. How much shareholding an investor keeps in a company is a highly commercial matter for them. Such decisions can obviously come if they serve their commercial interest.
But when a cap is placed on it, the shareholders' hands are weakened in the negotiation table. Hence, it clearly flies in the face of the Foreign Investment Protection Act. Needless to say, it sends out a very wrong signal to the global community of foreign investors.
Besides, since our listing in the capital market, we haven't felt that the market can meet our funding demands. Hence, questions naturally pop up in mind with regards to the considerations that went into framing the capping of foreign shareholding in mobile companies.
Moreover, the recently reformed policy bars foreign telecom Groups from investing in more than one category of licenses. Such restrictions, unseen anywhere else in the world, are working to sully the prospect of the country's ability to draw foreign investment.
We should not forget that 65% of the country's population are yet to use internet through their mobile device. We need to deploy the right regulatory tools and techniques and allow the investors with proven track record of massive investment undertakings in this sector to rope in this huge segment of the population.
Here it is important to note that the telecom industry has always worked shoulder to shoulder with the local entrepreneurs. For example, the Value Added Service (VAS) sub-segment of the telecom business have always been spearheaded by the local entrepreneurs, though there is no bar on the telecom sector to get involved in it directly.
The ILDTS policy regime that governed the telecom sector for the last 15 years had provided ample opportunity for the local entrepreneurs. It is only fair to do a sincere and honest assessment on the level of their contribution against what was expected of them.
The future of telecom sector is going to be radically different from what it is today. If the investors' profiles, be it local or foreign, does not fit the purpose and demand of the country, the ultimate outcome will only add to the frustration among the customers.
It's worth noting that the Eighth Five-Year Plan had aimed to raise FDI inflows to 3 percent of GDP, but they have remained below 1 percent each year. The figure is less than one-fourth of what Bangladesh needs. On the contrary, Vietnam's FDI reached $38.23 billion, while Cambodia attracted $8.1 billion in 2024. If Vietnam and Cambodia can do it, there is no reason for Bangladesh not to.
We strongly believe that Bangladesh still offers tremendous growth opportunity for foreign investors in the telecom sector given the size of the population and the projected growth trajectory of the country. However, the opportunity will not materialize unless we start asking ourselves what we want from the sector, actually! Till then, the future of FDI in the sector will remain a potential but lacking actualization.
